I've worked as either a journalist, editor or columnist for 16 years, first in the UK and now in the US, focusing on business, finance and the arts. This blog is about art, investing, and where those two worlds collide. Words I've put in a row have appeared on the BBC website and in the Financial Times, The Economist, Art + Auction Magazine, Worth Magazine and The Guardian, among others. I've written about everything from pension trusts for artists to art investment vacations, but also plenty of straight investment and personal finance articles on topics such as exchange traded funds and municipal bond funds, as well as general art and art business articles about artists, galleries and art communities. I also write about the market for other collectibles such as wine, photography, vintage cars, jewelry and furniture. You can find some of my other business, finance and arts articles, along with some travel and lifestyle pieces, on kathryntully.com. Follow me on twitter.com/KathrynTully or find me on Facebook at facebook.com/forbespriceless.

Can Sotheby's Keep Its Edge?

Sotheby's New York HQ at York Avenue and 71st Street. (Photo credit: Wikipedia)

The Lex column in the Financial Times today mulls the ramifications of another activist hedge fund investor, this time Dan Loeb, increasing his stake in Sotheby’s auction house to over 5%. This follows the news at the end of July that Marcato Capital Management had upped its holding in the company to 6.6%, which I wrote about here.

The FT also questions how Sotheby’s, as a retail company, manages to hang on to a falling but still sizeable operating margin of 30% and justifies its hefty buyer’s premiums:

Why, in an era where technology has made most other retail markets more transparent, are there only two places to sell pricey paintings? It is sadly reminiscent of the bank oligopoly that runs the prime IPOs. Sure, Sotheby’s and Christie’s understand art, know all the right buyers and provide cachet but is that worth, according to Sotheby’s itself, $400,000 in fees for a $2m purchase?

In fact, technology is rapidly making the art market more transparent and it’s hardly fair to say that Sotheby’s and Christie’s are the only place to sell pricey paintings. For a start, there is Phillips, Bonhams and other traditional brick and mortar auction houses and then there are online auction houses, such as Auctionata, which sold Egon Schiele’s Reclining Woman for $2.3 million in June, the most expensive online-only art purchase to date.

Yet it’s true that Sotheby’s and Christie’s still vastly overshadow the competition. At a time when even Amazon has got into the fine art selling game, can they retain that edge?

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.